January 21, 2016

Key provisions in Michigan’s energy law will continue
into the new year, despite requirements that electric utilities meet renewable
energy and efficiency targets by the end of 2015.

Even though lawmakers haven’t adopted bills to update the
state’s 7-year-old energy policy, those standards don’t sunset — meaning
utilities only will have to maintain current benchmarks unless or until a new
law is signed.

Under current law, utilities have to generate at least 10
percent of their electricity from renewable sources — a target they’ve met —
and to offer energy efficiency programs to customers with savings equal to 1
percent of total electric sales.

“Life continues on,” said Valerie Brader, executive director
of the Michigan Agency for Energy, created in 2015 by executive order from
Gov. Rick Snyder to administer the state’s energy programs.

“I’ve heard people say, ‘So that means it expires.’ I just
want everyone to be very clear: Absent a repeal, it remains there so the
utility could never fall below 10 percent as calculated in the law going
forward,” she said. “While it expires in the sense that there’s no new
requirement, it does not actually expire from a legal sense.”

Yet Snyder and other interested groups, including utilities,
are calling on the Legislature to adopt changes to the law, known as Public Act
295 of 2008.

The administration wants a statewide policy to help guide
development of Michigan’s plan to comply with new federal carbon rules, the
first draft of which is due next September. The state is tasked with meeting an
emissions reduction target of 31 percent by 2030, Brader said.

Utilities also are taking several coal-fired plants offline
this year and have said they want more certainty for planning.

The Legislature adjourned until mid-January without taking
action on energy. In the House, two bills sponsored by Rep. Aric Nesbitt,
R-Lawton, await a vote in the full chamber. In the Senate, the energy and
technology committee continues to work with bills sponsored by Sens. Mike Nofs,
R-Battle Creek, and John Proos, R-St. Joseph.

Renewable energy and energy efficiency are among the hotly
contested issues. The bills would eliminate both mandates.

Utilities, including Detroit’s DTE Energy Co. and
Jackson-based Consumers Energy, say the cost has dropped to build
renewable projects, and they’ll have no choice but to pursue them to comply
with new federal carbon emissions rules known as the Clean Power Plan.

DTE recently said it plans to build two solar projects near
Lapeer that can generate 45 megawatts. Utility spokesman John Austerberry
didn’t immediately know how much that project would contribute above its 10
percent renewable minimum, but said it provides a cushion to DTE’s target
should customer load increase.

Austerberry said DTE also is seeking proposals from
prospective vendors to continue efficiency programs through at least 2018,
following the expiration of contracts later this year.

“Energy optimization makes a lot of sense. It’s certainly
one of the least-cost options when you look at other generation sources,
because when you save energy — when your customers are saving energy — you
don’t need to provide additional generation,” Austerberry said.

The utilities and Snyder want to end the mandates in favor
of a longer-term planning process known as integrated resource planning, as
proposed in the legislation.

But proponents of the mandates say utilities would have no
incentive to continue renewable or efficiency programs without the requirement
they meet specific standards.

The Michigan Public Service Commission, in a report
this fall, said electric utilities’ spending on programs to reduce energy
consumption in 2014 should save customers at least $1.1 billion over the
duration of those programs.

“Clearly, no bill is better than a bad bill, because the
existing structure stays in place,” said Martin Kushler, a senior fellow with
the Washington, D.C.-based American Council for an Energy-Efficient
Economy.

“The existing law is not too bad. There’s some important
ways it could be improved,” he said — namely, upping Michigan’s energy waste
reduction standard to at least 1.5 percent.